[Congressional Record (Bound Edition), Volume 151 (2005), Part 5]
[Extensions of Remarks]
[Pages 5957-5958]
[From the U.S. Government Publishing Office, www.gpo.gov]




 EXPRESSING CONCERN WITH THE CUTS IN THE PROPOSED BUDGET OF THE SMALL 
                        BUSINESS ADMINISTRATION

                                 ______
                                 

                              HON. ED CASE

                               of hawaii

                    in the house of representatives

                         Friday, April 8, 2005

  Mr. CASE. Mr. Speaker, I rise today to express my continued 
disappointment with the proposed budget for the Small Business 
Administration. The budget request for fiscal year 2006 is $593 
million, nearly $100 million below what was requested last year, 
representing a ten percent decline in program funding. These funding 
cuts are coming from some of the most important programs within the 
SBA, including the 7(a) loan program, Disaster Loan Program, and the 
Program for Investment in Microentrepreneurs (PRIME).
  Mr. Speaker, I hope that as this House considers the budget 
resolution, we can remember the important service that the SBA provides 
to all of our constituents. To remind my colleagues of the importance 
of the SBA, I have included an article that appeared in the March 16, 
2005 edition of the Honolulu Advertiser. Entitled ``SBA Faces Budget 
Cuts,'' this article highlights several individuals in my home state 
whose businesses would not have survived without the timely assistance 
of the SBA.

              [From the Honolulu Advertiser, Mar. 1, 2005]

                         SBA Faces Budget Cuts

                         (By Catherine E. Toth)

       If Pablo Gonzalez didn't get $30,000 worth of government-
     backed loans over the past five years, he would have had to 
     shut down his juice bar.
       Fortunately, the U.S. Small Business Administration 
     provided guarantees for two loans--one in 2000, another in 
     2002--that allowed Gonzalez to expand his business.
       Since then sales at Lanikai Juice Co. have increased nearly 
     15 percent every year, Gonzalez said. He hopes to open a 
     second location sometime soon.
       ``As a small business, your chances to survive are more 
     difficult,'' said Gonzalez, who moved to Hawai`i eight years 
     ago from Barcelona, Spain. ``You have to live with higher 
     prices and less profit. . . . If It weren't for SBA, 
     honestly, I don't think I'd still be here.''
       Nearly 20 million small businesses nationwide have 
     benefited from technical assistance, loans and grant programs 
     offered by the SBA. Its current business loan portfolio of 
     about 219,000 loans worth more than $45 billion makes it the 
     largest single financial backer of U.S. businesses in the 
     nation.
       But the agency may find it harder to carry out its mission 
     next year if Congress approves proposed cuts to its fiscal 
     2006 budget.
       The proposed budget for SBA is $593 million, a 13 percent 
     decline from the agency's 2005 request and a 36 percent drop 
     over the past five years.
       More than 50 small-business programs, including those in 
     Hawai`i, are slated for cuts or elimination in the proposed 
     budget, up from 35 last year.
       Among those slated for elimination are the agency's 
     Microloan program, its startup loan program for low-income 
     entrepreneurs, and the SBIC Participating Securities program, 
     its flagship venture capital program.
       (As in fiscal 2005, the 7(a) loan guarantee program--the 
     agency's primary business lending program--will not be 
     subsidized. Instead of taxpayer funds, it will be sustained 
     entirely on an increase in fees by lenders and borrowers.)
       This doesn't bode well for entrepreneurs who can't get 
     conventional loans, especially with the Hawaii Community Loan 
     Fund, a lender of last resort, filing for bankruptcy last 
     month.
       ``(The Microloan program) is very worthwhile because you're 
     helping people who couldn't get a start,'' said Dr. Tin 
     Myaing Thein, executive director of the Pacific Gateway 
     Center, which administers SBA's microloans. ``This is for 
     people who don't have a chance with the bank, who would have 
     no chance at all to start their own business. We have so many 
     success stories here.''
       Abracadabra Cabinets at Campbell Industrial Park fell into 
     a slump after the terrorist attacks of Sept. 11. Owner Joanne 
     Gibeault needed some extra cash to keep her business going.
       But she couldn't get a loan or a line of credit from her 
     bank. So she turned to SBA.
       Through the agency's Community Express loan program, which 
     offers microloans to small-business owners, Gibeault got 
     $15,000 last year to pay bills and grow her business.
       Since then the business has grown nearly 50 percent, she 
     said. Her biggest problem now is finding experienced cabinet-
     makers to hire.
       ``We had a hard time recovering after 9/11, like everybody 
     did, but it took a little longer for us to catch up,'' said 
     Gibeault, who lives in Makakilo. ``We struggled for a while. 
     . . . The loan was just enough to get us over and keep the 
     business going.''
       Gibeault started her custom cabinet company 10 years ago in 
     Kailua. A journeyman cabinet maker, Gibeault had no 
     experience operating a business. She took classes and 
     attended seminars offered by the Hawai`i Women's Business 
     Center.
       Funding for these centers also is slated for cuts in the 
     proposed budget.
       ``I can build stuff,'' Gibeault said. ``But I didn't know 
     how to run a business when I

[[Page 5958]]

     started. These programs are definitely needed.''
       As with the Women's Business Centers, funding for the 
     agency's Small Business Development Centers may be cut or, at 
     the least, remain flat, despite a request to increase its 
     funding to $109 million from $88 million the year prior, said 
     SBDC state director Darryl Mleynek.
       The Hawai`i SBDC receives $500,000 from the federal 
     government and $638,000 from the state annually. That amount 
     hasn't changed for more than five years.
       This year the Hawai`i SBDC requested another $584,000 in 
     funding from the state to help with growing operating costs. 
     Expenses have increased about 17 percent over the past four 
     years, Mleynek said.
       ``What we do is extremely important,'' Mleynek said. 
     ``Working with small businesses offers state governments the 
     fastest opportunity for creating sustainable economic 
     development. And the reason is because small businesses are 
     such a large part of our economy and when they get 
     assistance, they increase their sales rapidly, they hire new 
     people, and all of that comes back very quickly.''
       While his program competes with others, in particular 
     social programs, for funding from the state, Mleynek is 
     confident that lawmakers will realize the value of investing 
     in small business to the overall health and growth of the 
     economy. And he's hoping for extra money in light of 
     potential cuts to federal funding for the center.
       ``I believe the Legislature understands the value of 
     putting money into our program, but money these last few 
     years has been very tight,'' Mleynek said. ``To put money 
     into one program and not another, those are very difficult 
     choices. . . . But I'm cautiously optimistic.''

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